Whether the rumblings are real or overinflated rumors, it's time to reverse any momentum that could unleash a potentially calamitous Middle East conflict, killing thousands, sending oil prices to $200 a barrel and beyond, and accentuating global recession.

After talks with Mr. Bush on his tour through Europe, British Prime Minister Gordon Brown didn't mention war explicitly, but did say that European states would agree to impose new financial sanctions on Tehran. Bush noted that "all options are on the table," and that the ball was in Tehran's court.

Tehran, meanwhile, seems to continue to ignore the threat of sanctions.

Beyond official statements, the latest clues to war parallel proposed and actual sanctions against Iran. Immediately after a high-profile visit to Washington earlier this month, Israeli cabinet minister Saul Mofaz publicly called an Israeli attack on Iran "unavoidable" unless Iran reined in its nuclear activities.

Members of a Bush delegation in mid-May reportedly assured Israeli officials in secret that a US attack on Iran was planned, according to Israeli Army Radio and in The Jerusalem Post as well as in American blogs and websites.

Also last month, the Asia Times claimed that US Sens. Dianne Feinstein (D) of California and Richard Lugar (R) of Indiana were given classified briefings about a planned US strike – not on Iran's nuclear sites but on headquarters of its Revolutionary Guard Corps. The purpose, the paper claimed, was to "send a message" to halt Iranian support for anti-US militias in Iraq. Offices for both senators vigorously denied the report.

To avoid further inflaming this kind of talk, the West must end Iran's race to nuclear weapons – not by force, but by bold transparent, and imaginative diplomacy.

This should include direct and comprehensive US-Iranian talks on the basic issues that have plagued Washington-Tehran relations since the Islamic Republic overthrew the late Shah in 1979 and the ensuing hostage crisis.

One immediate step the Bush administration could (but most probably won't) take is to make absolutely clear its intensions regarding long term presence in Iraq. Both Iraq – which is worried about its sovereignty– and Iran – worried about military threats – are anxious about the possibility of permanent US bases there.

Washington has forsworn such bases, but further reassurances are needed.

More realistically, the most powerful and technologically advanced nations, including the US, Britain, France, Germany, Japan, Russia, and China, should join in offering Iran much more cooperation in peaceful nuclear and other energy fields that would finally induce it to abandon uncontrolled enrichment of uranium or plutonium production and any related weapons programs. Though such offers have been periodically on the table for years, they can be effective now if we repeat and improve them, and make them more detailed.

Although nearly unnoticed in Western media, Iran made an official offer to UN Secretary General Ban Ki Moon in May involving a package of "comprehensive negotiations" on everything from the nuclear issue to general disarmament and help toward a Palestinian-Israeli settlement. If this were taken seriously and acted on, the West could stymie Iran's dangerous growing isolation.

To ease tensions, both US presidential candidates should specifically renounce plans for permanent US bases and presence in Iraq. As US historian William Pfaff recently wrote in his column, insisting on a permanent presence in Iraq would "turn Iraq into an American satellite state." This would force Tehran and other neighbors to regard Iraq as a threat and provide incentive to speed nuclear weapons activity.

Years of US and UN sanctions haven't made Tehran change its policies. Why would it do so now?

In fact, some of the big Western banks have acceded to US demands to curb credits to Iran, hitting imports of products from refrigerators to children's toys. But Iranian importers have now turned to Chinese and smaller Western banks. What Iran is discovering is that it can deal somewhat successfully regardless.

What's more, Iran is a major regional power. By defeating its enemies, Saddam Hussein and the Afghan Taliban, the US – helped by Iran in both cases – has greatly strengthened this power.

By reopening a US diplomatic mission in Tehran, dropping sanctions except those involving military technology, and improving the old offers of Western and Russian IAEA-supervised peaceful nuclear technology, the US could help avert intensified tensions or an actual war.

The wisest path to peace would be to encourage rather than discourage Western investment in Iran's oil – natural gas and other (nonmilitary) industries – and engage immediately in direct, top-level dialogue with Iran's leaders.

We don't have to further back ourselves into a corner, from which neither the West nor Iran is able to come out without a fight.

• John K. Cooley is a former Monitor correspondent who covered the Middle East for more than 40 years. His latest book is "Currency Wars."